The conventional U.S. wisdom today is that Mexico is a problem, and Brazil is an opportunity. The reality is that while Mexico faces serious challenges, the United States shouldn’t count it out. And, while Brazil does present real promise, there are serious issues it has yet to take on.

Economically, these two countries are not as drastically different as current analyses suggest. Yes, Brazil has had six years of consistent high growth. In large part, these were the dividends from macroeconomic reforms begun in the mid-1990s under President Cardoso and reinforced and deepened by President Lula (in fact, the pick up in growth coincided with the start of Lula’s second term, when domestic money finally believed his centrist promises).

By comparison, Mexico embarked on a similar reform process ten years earlier and earned its macroeconomic dividend in the 1990s, when Brazil was still struggling to rein in hyperinflation. Looking at per capita growth rates over the last twenty years (not just the last 7 or 8), Mexico and Brazil actually look fairly similar (with annual average per capita growth of 2.25% and 2.5% respectively).

While both countries have now solidified a range of necessary macro reforms, they face somewhat similar long term challenges. Both desperately need to invest in infrastructure, in education, and to find ways to reduce stark inequalities. Both too are now thriving democracies – a plus on so many levels, but not for pushing through big comprehensive reforms.

There are of course big differences – but those don’t necessarily cut just in Brazil’s favor. Brazil is a bigger market, has ever increasing oil finds, and is a complement to China’s rise – all positive. But it is also a more bloated state, stands in a much worse place vis-à-vis inequality and infrastructure, and faces worrisome inflationary and exchange rate pressures that threaten to undermine its recent gains.

Mexico is already a more export and manufacturing-led economy. And while Obama (and others) made much of the potential of US-Brazil trade during his March visit, the reality is that the United States already depends on Mexico as its second largest export market – earning some $163 bn last year compared to $35 bn with Brazil.

Mexico is also a much more friendly business environment. According the World Bank’s Doing Business index, Mexico ranks 35th globally – and the highest in Latin America — while Brazil is a woeful 127th (out of a total of 183 countries). On the downside, Mexico lacks widespread credit (which is much more available in Brazil), suffers from too many monopolies and oligopolies, and so far competes with (rather than complements) China’s rise.

The upshot is that there is no clear “winner” in terms of future potential or peril. So what drives the misguided conventional wisdom? A recent paper by Roberto Newell, founder of the Mexican Institute for Competitiveness (IMCO), provides a partial answer. Analyzing the Mexico coverage in the New York Times and Wall Street Journal since the late 1980s, he shows the increasingly negative tone and focus of the main U.S. papers of record. While political and economic news dominated both papers in the 1990s (in large part due to NAFTA), in recent years crime and the border have taken over the new cycle. Economic and political news – much of it good – rarely merit a mention, much less a sustained focus.

This negative shift isn’t because that is the only news coming out of Mexico. Yes Mexico’s security situation is grave, but it isn’t Mexico’s only story. As the brief comparison above shows, there are many economic and political strengths (and weaknesses) in both countries. Newell lays out many more of Mexico’s advantages and advances vis-à-vis the much touted BRICs, which include Brazil.

This skewed coverage hits both countries – though Mexico the hardest. For Brazil, it encourages the “hot money” flowing in, further aggravating the underlying economic weaknesses. For Mexico, the resoundingly negative take may, somewhat paradoxically, make it harder to address the security challenge. To see through necessary changes, Mexicans need some sense of optimism and can-do spirit, as well as a sense of what can be lost – and that is so much of what Mexico has gained.

6 thoughts on “Rethinking the Scorecard: Brazil vs Mexico”

Very interesting thought about media perception. All I read and hear is how perfect conditions are for investment in Brazil. Meanwhile, all I hear and read about in Mexico is drug-related crime. Its extremely one-sided for both countries.

Also, interesting to note that Mexico had a big spurt of growth in the 1990s similar to Brazil’s growth story now. Be wary, I suppose…

Dilma hasn’t done anything drastic yet, and if her first year proves to be not as socialist as some feared, FDI will continue to grow.

There is also a substantial difference in the way Mexico’s economy differentiates from that of Brazil, and also of Chile, Argentina and other southamerican nations.

30 years ago Mexico’s export to the world were mostly commodities, oil and other raw materials. Mexico’s economy was basically an oil economy twenty five years ago, today more than 75% percent of Mexico’s exports are manufactured products.

Brazil on the hand has the opposite equation, they are exporting mostly raw materials, minerals, cereals, it is a commodity-driven economy and it’s dependency on commodities it’s already causing fears of dutch disease, one only needs to google about it to find out how expensive it is becoming for brazilian industries to manufacture in the country with an expensive currency.

So while Mexico competes with China in manufacturing products ever more competitively, Brazil sells commodities to China and loses industrial competitiveness.

So Mexico’s growth is healthier in the long run, while Brazil’s commodity dependency presents a many more challenges.

Yeah, brazil’s economy is commodity based, but they still don’t understand the basic concept of sanitation, and why a country needs it. I live in macae, the oil capital of the country. The sewage runs into canals and directly to the ocean~~~ very nice.
smells wonderful. Even cavaleros beach has sewage outfall pipes dumping raw sewage right onto the sand…
you can see the pipes and stains on wikimaps or google.

hy . Im very interested in your text and I would like to use some data as reference for my report at the University, specifically -> “the reality is that the United States already depends on Mexico as its second largest export market – earning some $163 bn last year compared to $35 bn with Brazil.”

Just have a look back at the 2016 Olympic Nomination: They showed Brazil as a paradise, happy people and development. The reality is far from that.

Let´s have a look at news on Mexico: Narcotraffic and violence.

Anyone can see those are not real portraits of each country. Mexico is not so bad and, of course, Brazil is not so good. But I have to recognize Brazilians have managed to communicate just the good side.

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Analyzing political and economic developments across Latin America and U.S. relations with the region, Shannon O'Neil's Latintelligence blog is jointly published with Latin America’s Moment on CFR.org.